NEW HAVEN OBJECTS TO UI PROPOSED RATE INCREASE AS THE COMPANY PREPARES TO BUILD NEW HEADQUARTERS IN ORANGE

(12/16/2008) NEW HAVEN- The City of New Haven presented a letter to the Department of Public Utility Control (DPUC) during a public hearing today to object to increased rates proposed by the United Illuminating Company (UI).

The City opposes the three main reasons UI states for increasing rates:

- Uncollectable Expenses – UI claims that the uncollectible expenses are higher than the DPUC allotted in creating the current rate system. Assuming that UI has vigilant bill collection practices, this points to the fact that electricity rates are very high already after the last rate increases, and a further increase may only exacerbate the problem, leading to an ever increasing series of hikes.

- Reduced kWh sales – UI has not been able to sell as much electricity as they projected. This accounts for 40% of the shortfall projected by UI. If customers are conserving electricity as promoted by DPUC and UI, they should NOT be penalized for doing the “right” thing. Also, future increases will result in future drops in demand, creating a feedback mechanism that ensures high prices.

- Increased capital cost of distribution systems – While overall demand is going down, peak demand has been going up steadily in CT. UI states that the capital costs related to upgrading its distribution network are above the DPUC projections.

The City also noted in the letter that, the highest density of UI customers occurs in New Haven and Bridgeport, which are also the areas of greatest economic distress. In essence, these urban customers subsidize the distribution networks of more affluent suburbs. A distribution charge that took into account the density of a customer’s neighborhood would provide a more equitable division of the costs of electricity distribution. The current distribution charge amounts to a subsidy of low-density sprawl, in direct opposition to the goals of Executive Order 15 of the Governor of Connecticut.

Further, only days ago, UI announced its plans to move to the suburbs and build new headquarters in Orange. “I find it particularly ironic that at a time when UI is claiming economic distress necessitating a rate increase; it finds the funds to acquire and develop land for a new headquarters in Orange,” wrote Mayor John DeStefano, Jr. in his two-page letter to the DPUC.